Dreaming about an exotic vacation? Tired of that $3,000 credit card balance? Wishing for a home renovation?

Maybe the reason you’re having trouble affording those things is because of your car.

After reading Zac Bissonnette’s new book, “How to Be Richer, Smarter and Better Looking Than Your Parents,” I don’t understand why so many people feel compelled to own cars they can’t afford. In it, he writes that the average monthly payment on a new car is $479, and that doesn’t even count the gas and insurance.

If you ask me, that’s crazy!

Dr. Thomas Stanley, who wrote “The Millionaire Next Door“ and “Millionaire Women Next Door,” has been studying millionaires for years. In his research, he found that the most popular car make among millionaires is a Toyota. Bet you didn’t guess that one! Bissonnette found similar results–in his book he says, “Most drivers of luxury cars aren’t rich, and most rich people don’t drive luxury cars.”

I Still Drive the Car I Got at Age 16

I drive the only car I’ve ever owned, a 1997 Toyota Corolla I’ve had since I was 16. It was a used car when I got it, and it now has almost 200,000 miles on it. I’m hoping it makes it to 250,000! My husband bought a 1998 hail-damaged Honda Civic with 60,000 miles on it for less than $5,000. That was seven years ago, and he’s still driving it. Yes, he bought a car that was hail-damaged. But it’s been an extremely reliable vehicle. He paid it off in nine months and hasn’t had a car payment since.

People forget about all the fun things you can do when you don’t have a car payment. My husband and I love to travel, and we choose to drive really cheap cars so that we can save money every month for a yearly vacation. We’ve been to amazing places all over the world. Last year we went to Thailand for two weeks, and we’ve visited Argentina, Italy, Mexico and Puerto Rico.

The thing is, we wouldn’t be able to travel as much if either of us had a car payment. And money is all about choices.

In our case, traveling feeds our souls, so we choose to do it. If that means we drive unimpressive vehicles, that’s okay with us. (We also max out our Roth IRAs each year, for those who are curious.)

The Average U.S. Household Can’t Afford This!

I can’t imagine spending almost $500 a month on a car. The average American household, which makes about $51,000 per year, can’t afford to spend that much. Most financial experts recommend that you keep your car-related expenses (car payment, gas & insurance) around 10-15% of your net pay, but if you’re buying a $30,000 car on a $51,000 salary, then you could be spending around 25% of your net pay on car-related expenses.

At LearnVest, we recommend devoting 50% of your budget to essentials, which includes not only your transportation costs but also your housing, utilities and groceries. If you’re spending 25% of your overall budget on car payments, that only leaves you 25% for your home and food.

By the way, if you’re one of those people looking to cut back in other places so you can achieve your financial goals, LearnVest came up with Cut Your Costs Bootcamp, a ten-day email program to help you save more money around the house, on utilities and, yes, even on your transportation costs.

You Could Do Something Way Better With That Money

When I suggest that people sock away $416 a month to max out their Roth IRA, some think that sounds like a ton of money. But many of those same people view a $400-to-$500-a-month car payment as a necessity.

It isn’t.

Saving for retirement should be the priority, not driving a nice car. If instead of outlandish car payments, you maxed out your Roth IRA every year for 40 years and earned 7% interest, you’d retire with over a million dollars!

The problem is that so many 20-somethings get caught in the car-buying trap, then have a car payment for the rest of their lives. Or they get sucked into leasing a vehicle so they can drive an even nicer car. Don’t be one of those people. Keeping up with the Joneses is ultimately pointless, as even the wealthiest among us feel poor sometimes.

An even better option: Buy your next car with cash.

If you have a monthly car payment, you’re wasting money on financing costs that could otherwise be going into your emergency fund or your retirement accounts each month. According to Forbes, the average new car costs $30,303 in 2012. If you financed 100% of a new 2012 car over six years with a 5% interest rate, your payment would be $488 per month. You will have paid $4,835 in interest over the life of the loan.

So your $30,000 car would end up costing you $35,138. That’s $5,000+ you could have put to good use elsewhere.

If you “must” finance a car, check out something in the $5,000-$15,000 range and try to finance it in half the time (three years). But to my mind, you can get a car for a few thousand dollars, and you may be surprised how long it can last.

How to Get Out of the Trap

What can you do instead? Trade in your car for a less expensive one and cut your car payment in half. If you traded in your $30,000 vehicle for one that cost half as much, you’d already owe $15,000 less. Do that first. Then pay extra on your loan. Once your car is paid off, keep saving the amount you used to spend on your car payment so you can pay cash for your next vehicle.

The next time you’re shopping for a new vehicle, ask yourself: Do you want to drive an impressive car, or do you want to be a millionaire?